Do As I Say, Not As I Boooo! Don’t Walk the Financial Tightrope

On this Happy Halloween day, hopefully you caught our funny parity title, which this time, was NOT a typo, we wanted to share with you another example of Diversification’s importance.

Today a Broker Dealer Firm, mostly involved with commodity trading and clearing, is filing for bankruptcy protection. One of the apparent culprits, concentrated investments.

This brings up a super emotional topic for us, as professional investors such as ourself,  preach diversification as the core part of their strategy. There are sexy stories of investors betting the farm on something,  hitting red, and taking home all the marbles. In the speed at which markets move today, this is like walking a tight rope across two tall buildings, without a net, balancing pole, shoes, and a loose knot at one end of the rope. You might make it every once in a while, but the times you do not are really bad!

In today’s market climate, diversification and prudence are a pre-requisite of any investment portfolio.

As a basic rule, if one investment can make you rich, or worse, make you poor, you are not diversified. Almost any investment should be able to accidentally fall in great value, and damage, but not destroy, an investors’ portfolio.

On a Ghostly, chocolate energy enriched day, boring prudence is still good !

Happy Halloween !



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